On December 9, 2013, the Occupational Safety and Health Administration (“OSHA”) requested comments concerning potential changes to its Process Safety Management (“PSM”) program that could have a significant impact on oil field operations. See 78 Fed. Reg. 73756 (Dec. 9, 2013). Among the many “modernizations” of the PSM standard, OSHA is seeking comment on the elimination of exemptions that directly affect oil field operations. Current exemptions of concern include:
- atmospheric storage tanks;
- oil-and-gas production facilities; and
- oil-and-gas well drilling and servicing.
PSM applies to “a process which involves a Category 1 flammable gas (as defined in 1910.1200(c)) or a flammable liquid with a flashpoint below 100 °F (37.8 °C) on site in one location, in a quantity of 10,000 pounds (4535.9 kg).” 29 CFR 1910.119(a)(ii). The addition of atmospheric storage tanks is significant as a tank as small as 35 Barrels of crude oil will cause the “process” to exceed the 10,000 pound threshold. As a consequence, other process equipment that contains less than 10,000 pounds of flammable materials that is connected to the tank (via piping) may also become subject to PSM requirements.
OSHA is also seeking comments on eliminating the PSM exemption for oil-and-gas production facilities. On December 20, 1999, OSHA issued a memo to its regional administrators entitled PSM Applicability to Oil/Gas Production Facilities that stated that “production facilities . . . were always intended to be covered under PSM.” 78 Fed. Reg. at 73758-59. OSHA withdrew the memo on March 7, 2000 in response to American Petroleum Institute (“API”) objections as OSHA failed to conduct an economic analysis during the original rule development. Presently OSHA is considering re-opening this process.
Finally, OSHA is requesting comments on the elimination of the oil-and gas-well drilling and servicing exemption from PSM. In 1983, OSHA initiated development of regulations specific to this sector of the industry. Comprehensive safety regulations for this sector were proposed but never promulgated. See 48 Fed. Reg. 57202 (Dec. 28, 1983). The scope of the original proposal was significant and covered the following:
(a) Scope and application. (1) Scope. This section contains requirements for drilling, servicing and related operations performed on, or in support of, potential and actual oil and gas wells, including injection wells and water supply wells. The standard addresses hazards associated with assembling and disassembling rigs, rotary drilling, well servicing, cementing, drill stem testing, well completion, wire line services, and acidizing. 48 Fed. Reg. at 57217.
Well servicing means the remedial or maintenance work performed on an oil or gas well to improve or maintain the production from a formation already producing. See 48 Fed. Reg. at 57220
Interested parties are invited to comment on these items prior to March 10, 2014.